In today’s low yield environment, now more than ever, people are being seduced by the promise of better returns, without appreciating the significant capital risk involved. Although, it may look great for a while, this approach usually ends badly in due course. We must steel ourselves against financial sales people and products promising returns far above ‘risk-free’ rates today. When 1-year investment grade bonds, GICs and Certificates of Deposit are paying less than 1%, securities offering multiples of that, are doing so at much higher and, in many cases, inappropriate capital risk.
Unfortunately, a great many people are being sucked into scams and schemes that will harm them, and negative outcomes are more common than many realize. In many cases, it is not actual fraud, but simply reckless salespeople and gullible savers that end up in ruin. Either way, people near the end of their working career, or already in retirement, have very little tolerance for capital risk, because they have insufficient time to wait for rebounds or replenish savings lost. And yet, we are bombarded daily by financial propaganda promising to boost returns, “play” or “trade” our way to riches.
This recent story from Canada is a sad example of outright fraud. See: Binary options-the latest investment scam.
Canadian securities regulators have started a task force to raise awareness and protect Canadians from the latest investment scam, so-called binary options that can cost investors everything they have — including their lives. Here is a direct video link.
Last night we caught the first episode of the new series “The Good Fight” from the producers of the long running “The Good Wife”. I thought it was excellent, timely, and a worthwhile warning to everyone about the proliferation of financial scams in the world today. Here is a direct video link.